Fiscal Year 2012 Results:
- The Company opened 18 new Outlet stores, remodeled 13 existing stores, and closed 31 stores, ending the year with 519 stores, including 44 Outlet stores, and 2.7 million selling square feet in operation.
- Net sales were $966.4 million compared to net sales of $956.5 million for fiscal year 2011.
- Comparable store sales increased 0.1% versus a decrease of 3.3% in fiscal year 2011.
- Operating income was $2.3 million. On a non-GAAP basis, the Company’s adjusted operating loss was $2.1 million reflecting a significant improvement from the prior year’s operating loss of $35.6 million.
- Net income was $2.1 million, or $0.03 per diluted share. On a non-GAAP basis, the Company’s adjusted net loss for fiscal year 2012 was $2.2 million, or $0.04 per diluted share. This compares to a net loss of $38.9 million, or $0.64 per diluted share, for fiscal year 2011.
The Company’s expectations for the first quarter of fiscal year 2013 reflect softer than anticipated business in February due to a significant reduction in traffic driven by a combination of factors including challenging macroeconomic conditions affecting consumer spending and unfavorable weather conditions versus last year. The Company notes that while February was disappointing, it is entering its peak selling periods later in the first quarter – Easter and pre-Mother’s Day. The Company’s guidance also encompasses improved March month-to-date trends versus February.
- Net sales for the first quarter of fiscal year 2013 are expected to decrease in the low single-digit range. This includes the impact of 27 fewer stores in operation since the first quarter of fiscal year 2012. Comparable store sales on a shifted basis are expected to be down in the low to mid single-digit range.
- The Company expects merchandise margin to be approximately flat. Fixed occupancy costs are expected to deleverage based on lower sales versus last year. As a result, gross margin is expected to decrease 100 to 250 basis points versus the first quarter of last year.
- Selling, general and administrative expenses are expected to be down slightly in dollars and flat to up slightly as a percentage of net sales versus the prior year’s first quarter.
- The operating loss for the first quarter of fiscal year 2013 is projected to range between $2 million and $8 million.
- The Company expects the effective tax rate to be 0%. As previously announced, the Company continues to provide for adjustments to the deferred tax valuation allowance offsetting any tax provisions or benefits resulting in a 0% effective tax rate.
- The Company expects inventory levels at the end of the first quarter of fiscal year 2013 to be down in the mid single-digit range as compared to the prior year.
- The Company does not anticipate the need to borrow against its revolving credit facility during the first half of fiscal year 2013.
- Capital expenditures are expected to be approximately $6 million for the first quarter of fiscal year 2013, as compared to $5.9 million in the prior year’s first quarter, reflecting anticipated store remodels and investments in information technology and eCommerce. For fiscal year 2013, capital expenditures are expected to be in the range of $22 million to $25 million, as compared to $18.1 million in fiscal year 2012. Depreciation expense for the first quarter of fiscal year 2013 is estimated at approximately $9 million. For fiscal year 2013, depreciation expense is expected to be approximately $34 million.
- During the first quarter of fiscal year 2013, the Company expects to open one new Outlet store, remodel four existing locations, and close six stores, ending the first quarter of fiscal year 2013 with 514 stores, including 45 Outlet stores. For fiscal year 2013, the Company expects to open between 8 to 12 new Outlet stores, remodel 10 to 15 existing locations, and close between 30 and 36 stores, ending the year with between 491 and 501 stores, including 52 to 56 Outlet stores.
Mr. Scott concluded, “We believe we have the right strategies in place to deliver improved operating performance in fiscal 2013, while making strategic investments in key areas of our business. Our entire organization is dedicated to the successful execution of our 2013 Keys to Success, which are: maximize sales and profitability during peak traffic times of the year; increase brand awareness and drive traffic to our stores; maintain our dominance in wear-to-work while furthering our opportunity in the pant and denim category; reduce markdowns through business process improvements; invest in technology to seamlessly integrate all business channels -- ultimately delivering a compelling omni-channel customer experience; and continue to expand our growing eCommerce and Outlet businesses.”
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